And so it has come to pass that Gnucash no longer suffices as my accounting software. It saddens me as I think the project is great and for many applications it would still be a great solution. There is not one overwhelming flaw with it, but a series of small deficiencies that occur simply because it’s a project run by volunteers with limited time.

The experience of using Gnucash has been great – I know far more about bookkeeping as a consequence of having to think hard about how to do it properly in Gnucash than I expect I would have if I’d jumped straight to a more modern solution. I’ve had a few problems that sunk time, including the handling of VAT just being more effort than it should be, but the final problem that brought me to a decision was the difficulty in exporting a suitable set of reports for the accountant at the end of the year. It eventually worked, but not without much effort and various frustrating bugs in layout. I dare say I could spend a while learning Scheme and writing my own reports, but the time has come to throw money at the problem.

For me, a cloud solution just seems to be the right way to do this. Web based solutions generally provide all the benefits of low up-front cost, device independent access and continuous upgrades along with perfect cross-platform support, which as a Linux user I truly value.

A cursory investigation flagged up three possible options for me as a fledgling micro business (albeit with a few complicated transactions to handle): Freeagent, Xero and Kashflow. Freeagent was the first I looked into – my (naive as it turned out) assumption was that being UK based, Freeagent would better handle the UK tax situation, though given the apparent pervasiveness of Xero, that was the one I tried first.

It was a little frustrating getting Xero set up – primarily because I had to fully grasp the notion of all the start up balances (still learning!), but I got there in a reasonable couple of hours. The online help was really excellent here. Another hour later and I had the historical data since the last year end (actually slightly earlier to begin on a new VAT quarter). What really impressed me was the single click to get the VAT return that I’d spent 3 hours fiddling with in Gnucash earlier (and, pleasingly, it was exactly what I’d written in my return to HMRC!). So much for a non-UK company having difficulty with UK tax.

I’m very impressed with Xero. I initially felt pretty constrained by all the transactions happening through actions (sales, purchases, etc) which was at odds with me being used to the general ledger being the top level concept in Gnucash, which invoices and bills influence. I had to think for a few mins how I wanted to do something in this new way, but my conclusion is that Xero actually presents it better. The only account that one can easily modify are the bank accounts (though of course, that carries an implicit change in some other account because it is a true double entry system behind the scenes), and I wasn’t convinced at first that was flexible enough. I now think it probably is for almost all the situations I’m ever going to need.

The invoices in Xero are (almost) delightful. Once the data is entered, a beautiful invoice is rendered (with almost no work on my part beyond adding a logo and payment details). One click sends it off the intended recipient (as well as me if I so desire). I played around a bit with modifying the contacts (the general term for people you might interact with, i.e. an invoice recipient) and invoice settings and they seem really quite flexible – multiple recipients, alternative email content etc. The one issue I had, which may well be down to me now knowing how to do it, was having to enter every line on the invoice afresh – there was no attempt to autofill based on what I’d written on previous invoices or the line above or anything, or the ability to copy a line. This is something Gnucash does better :).

Overall Xero will fit well with my needs and the interface is simple, clean and intuitive (to me with a reasonably understanding of double entry bookkeeping).

I thought I ought to compare with an alternative, so I signed up to the free trial of Freeagent. Kashflow I’m sure is great – I was put off by something, which I’ve forgotten. Also, Kashflow seeming to not do much in the way of bank feeds (Yodlee does sound like a dodgy solution, and that seriously puts me off Freeagent. Xero has a partner agreement with HSBC, so they seem to be able to do bank feeds “properly”, though Yodlee is an option). If I get a chance to play with Kashflow I’ll report back.

The Freeagent sign up process was very quick and simple, but left me wondering how I insert the opening balances or change the chart of accounts. After a bit of searching I found the relevant help page, but I do think that should have been a somewhat guided process at sign-up – the system wasn’t useful to me until that essential information had been entered. It is also possible to change at least some of the accounts – like income and expenditure accounts. I could not find out how to change the asset accounts though. This is substantially less flexible than Xero and seems oddly restrictive.

On the whole Freeagent seems slightly less slick that Xero. For example, it’s very prescriptive in how I need to enter a date. In Xero, I just type 3/4 and it gets interpreted on the fly as 3rd April 2014 (so I could edit it if necessary). In Freeagent, I get a complaint that the date was mis-entered. This is superficially a minor issue, but something that is just unnecessary and IMO shows a lack of attention to detail. It was a more general perception as well – the interface in Xero is a lovely balance of presenting and inferring the right information at the right time; once i’d worked out the general layout, everything seemed to be where I expected it to be. In Freeagent, things just don’t seem as intuitive. That’s probably not a wholly fair assessment, but it was certainly a feeling I had. Despite being very similar in the way they operate, I still feel pretty lost in Freeagent. I’ve no doubt that will fade with time, but the feeling went very fast with Xero.

On the whole, I actually think both Xero and Freeagent would be great for my purposes. The extra flexibility of Xero might help in the long run, but many people wouldn’t need that. Despite that, my opinion so far is I’ll be going with Xero. That’s not to say that Freeagent isn’t very good, I just think Xero is fantastic.

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About Henry Gomersall

I'm a engineer wanting to make things actually useful. I'm someone that wants to drive technology and ideas to be helpful for everyone. I'm someone that realises the disconnect between technology and utility and I hope to correct that...